Veterinarians’ loss of their AVMA Group Health Insurance delivered the sobering reality that we need to be ready for the changes occurring in our health insurance system. Veterinarians will be facing these changes from the standpoint of our own individual insurance, and as business owners. Leaving the politics of this aside, learning what we can about the new requirements and the options available is essential for future management of our health insurance. Additional administrative burdens for employers will be lessened if practice owners know what is coming at them.
The changes are a little easier to assimilate if they are broken down into categories that are most relevant. Looking at those guidelines and regulations that apply to small business with less than 25 employees is most fitting for the majority of veterinary practices. The 2011 AVMA Report on Veterinary Practice Business Measures indicates there is an average of 10 employees for companion animal exclusive practices. All other practice types average less than this amount. The Small Business Administration (SBA) offers guidance for the self-employed, and businesses of less than 25 employees. 
Implementation of the Patient Protection and Affordable Care Act (PPACA) occurs in stages, with many of the reforms and requirements taking effect in 2013 and 2014. Some of the key provisions that may impact self-employed individuals include the following.
Individual Shared Responsibility Provisions
Starting in 2014, the Individual Shared Responsibility provisions of the Affordable Care Act call for each individual to have minimum essential health insurance coverage unless qualifying for an exemption, such as hardship or religion, or if the only coverage they qualify for is unaffordable. Qualifying plans include those from the individual marketplace, employer based insurance plans as well as government subsidized plans such as Medicare, Medicaid, and Tricare (military).
Individual Insurance Marketplaces
Coverage through new competitive health insurance marketplaces for individuals and small businesses will be in place January 1, 2014 with open enrollment beginning October 1, 2013. The individual health insurance marketplaces will offer a choice of four levels of benefit packages that differ by the percentage of costs the health plan covers. Individuals and the self-employed may qualify for individual tax credits and subsidies on a sliding scale, based on income. The marketplace and additional pertinent information regarding individual coverage can be accessed at <http://finder.healthcare.gov/>.
New Medicare Assessment on Net Investment Income
Beginning January 1, 2013, a 3.8% tax will be assessed on net investment income such as taxable capital gains, dividends, rents, royalties, and interest for taxpayers with Modified Adjusted Gross Income (MAGI) over $200,000 for single filers and $250,000 for married joint filers.
Employers with Fewer Than 25 Employees
Small Business Health Care Tax Credits
The small business Health Care Tax Credit is specifically targeted for small employers with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. The criteria for qualifying for this credit is the same since first instituted in 2010:
- Have fewer than 25 full-time equivalent employees (FTEs),
- Pay average annual wages below $50,000,
- Contribute 50% or more toward employees’ self-only health insurance premiums.
In 2014, this tax credit goes up to 50% and is available to qualified small employers that participate in the Small Business Health Options Program (SHOP). Eligible small employers can claim the current credit through 2013, and the enhanced credit can be claimed for any two consecutive taxable years beginning in 2014 through the SHOP.
Workplace Wellness Programs
20 to 50 percent of the cost of health care coverage may be available to employers that implement health-contingent wellness programs. Examples are programs that provide a reward to employees who don’t use, or decrease their use of, tobacco, and programs that reward employees who achieve a specified level or lower cholesterol.
Small Business Health Options Program (SHOP)
Starting in 2014, small employers with generally up to 50 employees will have access to the new health care insurance marketplaces through the Small Business Health Options Program (SHOP). This can be accessed at < https://www.healthcare.gov/marketplace/shop/>. To enroll, eligible employers must offer SHOP coverage to all full-time employees. Health and Human Services (HHS) recently launched a new call center specifically to serve small businesses with 50 or fewer employees interested in the SHOP Marketplace. That number is 1-800-706-7893.
Employer Notice to Employees of the New Health Insurance Marketplace
By October 1st those practices that have at least one employee and at least $500,000 in annual dollar volume of business), must:
- Provide notification to their employees about the new Health Insurance Marketplace;
- Inform employees that they may be eligible for a premium tax credit if they purchase coverage through the Marketplace;
- Advise employees that if they employee purchase a plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer.
The Department of Labor (DOL) has provided employers with sample notices they may use to comply with this rule.
Summary of Benefits and Coverage (SBCs) Disclosure Rules
To help employees better understand and evaluate their health insurance options Employers are also required to provide employees with a standard “Summary of Benefits and Coverage” form explaining what their plan covers and what it costs.
Limits on Flexible Spending Account Contributions
For plan years beginning on or after January 2013, the maximum amount an employee may elect to contribute to health care flexible spending arrangements (FSAs) for any year will be capped at $2500, subject to cost-of-living adjustments. Note that the limit only applies to elective employee contributions and does not extend to employer contributions. Health Savings Accounts (HSA) contributions are not reduced but some limitations on use of the funds for over the counter drugs have been instituted and early withdrawal penalties have been increased.
Additional Medicare Withholding on Wages
As of the beginning of 2013 the employer is responsible for collecting additional employee portion of Medicare on employees with incomes of over $200,000 for single filers and $250,000 for married joint filers. The employer portion of the tax remains unchanged.
90-Day Maximum Waiting Period
Beginning January 1, 2014, individuals who are eligible for employer-provided health coverage will not have to wait more than 90 days to begin coverage.
Transitional Reinsurance Program Fees
Beginning in 2014 and continuing until 2016, employers (for self-insured plans) and insurers (for insured plans) will pay a fee that reimburses insurers in the individual insurance Marketplaces for high claims costs. HHS estimates that the fees for 2014 will be $5.25 a month (or $63 for the year) for each individual covered under a health care plan, with the required fee for the following two years to be somewhat lower.
Health Insurance Coverage Reporting Requirements
Beginning with health coverage provided on or after January 1, 2014, employers that sponsor self-insured plans must submit reports to the IRS detailing information for each covered individual. The first of these reports must be filed in 2015.
Practice owners have enough management headaches already and are understandably concerned about the new health insurance regulations being thrust upon them as employers. Becoming informed of the relevant parts of the PPACA will help all concerned benefit where possible and cope as necessary. Many resources are available to help us understand and navigate the new system. The time to dig in and learn the system is now!
Fair winds and smooth sailing!
Jim Stephenson, DVM